Cost Benefit Analysis
When dealing with customers and the cost of what it takes to upgrade a system, it is rather difficult to hit it on the nose. For instance, XY&Z is planning on upgrading their fiber optic network in the Los Angeles area in order to combat market share loss to the cable company. XY&Z has pledged to spend $1 billion dollars in order to do so. (AT&T, 2007) The current cost of pulling fiber and upgrading here in South Carolina is approximately $5/ft. Since we are unable to truly judge what the costs may be in California, we'll use this number. XY&Z is using a fiber/copper hybrid cable which is slightly cheaper and gives almost the same results as fiber optic cable. We could use a slightly lower cost approximation but labor is more expensive on the west coast.
Looking at XY&Z's proposal of upgrading 40,000 miles of its network over the next 12 months, we see that if the budget was just used entirely for pulling, installing and burying the fiber/copper hybrid, we would come to a cost of $4.73/ft.
Budget Amount Upgrade Area Feet per Mile Cost Per Foot
$1,000,000,000.00 40,000 5,280 $4.73
Fiber optic cable itself sells for approximately $2.88/ft. XY&Z would benefit from the cheaper wire but needs to search for cheaper labor. Fiber splicing technicians are very expensive.
Analysts have argued that the cost of a Fiber-to-the-Premise (FTTP) deployment by Verizon, between $600 and $700 per subscriber for Broadband Passive Optical Network (BPON). On the other hand, the Fiber-to-the-Node (FTTN) architecture selected by AT&T will not deliver sufficient bandwid ...